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INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE I. Basic Information Date prepared/updated: 05/15/2007 Report No.

: AC2913

1. Basic Project Data Country: Vietnam Project ID: P104848 Project Name: VIETNAM- HIFU Development Project Task Team Leader: Kamran M. Khan Estimated Appraisal Date: April 16, 2007 Estimated Board Date: June 26, 2007 Managing Unit: EASUR Lending Instrument: Financial Intermediary Loan Sector: General finance sector (100%) Theme: Municipal finance (P) IBRD Amount (US$m.): 0.00 IDA Amount (US$m.): 50.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: BORROWER/RECIPIENT 30.00 30.00 Environmental Category: F - Financial Intermediary Assessment Simplified Processing Simple [] Repeater [] Is this project processed under OP 8.50 (Emergency Recovery) Yes [ ] No [ ] 2. Project Objectives The Project Development Objective is to develop HIFU as a model LDIF (in terms of internal policy and procedures for financial policy, sub-project appraisal, social and environmental safeguards, and partnership with the private sector) and increase private sector participation in financing municipal infrastructure in HCMC. 3. Project Description Component 1: Investment Capital (US$ [30] million; IDA US$ [50] million) A line of credit to help HIFU invest in cost recovery oriented municipal infrastructure projects in partnership with the private sector. A Project Preparation and Appraisal (PPA) Manual describes the way HIFU investments under the line of credit will be identified, developed and appraised. A pipeline of projects has been identified and the due diligence conducted to confirm HIFU?s absorption capacity. Two sub-projects have been appraised, including safeguards, for investment in Year 1 of project implementation. Component 2: Technical Assistance (US$ 0.5 million; IDA US$ [0] million) The technical assistance for project implementation and monitoring will be financed by HIFU. Technical assistance will support the implementation of key reforms, including: (i) support to implement the Project Preparation and Appraisal (PPA) Manual with onthe-job chief advisor and technical specialist, as well as a social specialist and an

environment specialist; (ii)support to implement the Private Sector Participant (PSP) Selection Manual with on-the-job chief advisor and private sector specialist; (iii) independent monitoring consultants for social and environmental safeguards policies; and (iv) Financial Audits of HIFU to International Auditing Standards. The project will develop Environment and Social safeguards management structures and institutional capacity within HIFU and HIFU?s borrowers and Special Purpose Vehicle Project Enterprises. The framework put in place will undergo a process of continuous improvement as HIFU staff gain more and more operational experience. The project design includes six-month review by the task team and clients of all project conditions, including the PPA Manual, which provides a useful mechanism to make appropriate adjustments to ensure the successful implementation of the project safeguards framework. The task team will share the results of the six monthly reviews of all project conditions, including the PPA Manual implementation experiences, with the Safeguards Secretariat to decide on next steps if any are required. The PPA Manual provides the necessary screens, flowcharts and TOR for the implementation of safeguards instruments to facilitate the implementation of subprojects and training of HIFU staff. 4. Project Location and salient physical characteristics relevant to the safeguard analysis The HDP is located in HCMC, the largest and most populated city in Vietnam. The investments under HDP are restricted to municipal infrastructure, but no mega projects are anticipated. Two subprojects will be financed in the first year of implementation: (a) The West Bus terminal is located in Ward An Lac, Binh Tan district. The Bus Terminal is surrounded by a very busy big road and two smaller roads, as well as a market and residential areas which include high-rise buildings. The reconstruction of the bus terminal will be restricted inside its existing area. (b) The Septic tank waste treatment plant is located in Commune Da Phuoc, Binh Chanh District. The site is a low land mainly for agriculture with many surrounding canals. The land has been allocated for four cemeteries and a hazardous waste landfill. The closest residential areas are approximately 500 meter away, located along the national road N-50 as well as a district road. 5. Environmental and Social Safeguards Specialists Ms Phuong Thi Thanh Tran (EASRE) Ms Hoa Thi Mong Pham (EASSO)

6. Safeguard Policies Triggered Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60) II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues

Yes X

No X X X X X

X X X X

1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: OP 4.01, Environmental Assessment. The HDP project is classified as Category FI. The complexity of subprojects evaluated for investment is varied. All subprojects will pass initial review and screening against the GOV and WB/IFC exclusion lists. Project categorization to meet GOV environmental regulations and WB environmental safeguards will be determined for each subproject based on known and potential environmental impacts. The HDP is expected to have mostly positive environmental and public health impacts as it contributes to improvement of HCMCs infrastructure, solid waste management, transport systems, and on-site sanitation services. The safeguards guidelines in the PPA Manual were used by HIFU in appraising the two subprojects for Year-1 in a manner acceptable to IDA. The PPA Manual will be similarly used in the preparation of the other subprojects in the investment pipeline. Prior review by the WB is required for high environmental risk sub-projects only. Environmental appraisal of the two year 1 pilot subprojects: The two subprojects in Year 1 would have overall positive environmental and social impacts by creating a better managed facility for bus services (Subproject 1) and safer disposal of septage than the current facility (Subproject 2). The investments in infrastructure have the potential for short-term and site-specific adverse impacts of construction work on resident areas around the bus terminal and along the roads to the disposal site in Da Phuoc commune. Key environmental issues during construction work under the two subprojects are noise and dust pollution, traffic congestion, transportation and disposal of waste construction materials, transportation of filling soils. Major environmental impacts during the operation phase are related to the operations of the waste treatment plant include odor and pathogenic bacteria, insects and bugs vermin, collection truck leakage, vehicle exhaust fumes, ground water pollution from pipe and tank leaks during the treatment process and surface water pollution from runoff, effluent

discharge from treatment facilities. Other impacts could be related to the management of waste generated at the bus terminal The design standards will ensure effluents from wastewater at the bus terminal be connected to the city?s sewer. Discharge from the septic tank waste treatment plant is expected to comply with the requirements for water quality of the receiving bodies. Better solid waste management would also contribute to improved environmental conditions of the cities. Nevertheless, improper transportation and disposal of the construction materials and the wastes would impose noise and dust pollution. Inadequate design of the disposal site would have long-term soil pollution and lead to hygiene consequences. Poor O&M of the septic tank waste treatment plant would cause serious environmental problems in the surrounding areas, especially the residential areas and the canals supplying water for agriculture and aquaculture activities. The PPA Manual guidelines were used by HIFU and IDA to carry out the due diligence assessments of the two subprojects, including assessment of the adequacy of the EIA and IEE reports, and assessment of the institutional mechanism of the Hoa Binh Ltd. in carrying out EA works for the Septic tank waste treatment (A-category project). A risk management plan has been developed for each of the subprojects to manage project risk associated with the deficient EMPs. Those risk management plans will be signed between HIFU and the sub-borrowers as condition of the loan disbursement to HIFU borrowers. Cultural Resources (OP 4.11) The PPA Manual requires that subprojects in the investment pipeline be designed to minimize possible viewscape changes or damage to historic and cultural sites. Proper construction supervision is also required during subproject implementation, particularly excavation and dredging works, to check for possible buried artifacts. OP 4.11 is not triggered in the two Year-1 subprojects. Natural habitat (OP 4.04) The PPA Manual requires that an environmental exclusion list will be used to screen all subprojects in the investment pipeline to ensure that the project does not finance adverse impacts or conversion of critical natural habitats. OP 4.11 is not triggered in the two Year-1 subprojects. Pest management (OP 4.09) All the subprojects in the investment pipeline will be screened against the use of chemicals listed in the Government restriction list. OP 4.09 is not triggered in the two Year-1 subprojects. OP 4.12 Involuntary Resettlement It is likely that some land acquisition will take place is some of the subprojects identified by HIFU. A Resettlement Policy Framework was prepared to be applied to

manage all issues related to land acquisition. Out of the two proposed Year-1 subprojects, only the Septic Tank Waste Treatment Plant required land acquisition. Compensation and resettlement activities for the subproject were concluded in 2005. According to prepared due diligence report, 1.9 out of the total of 9.4 ha have not yet been cleared, with about 10 households waiting for their complaints to be resolved and land plots in a resettlement site to be provided. HCMC PC has instructed Binh Chanh district PC to resolve the outstanding issues as soon as possible. Resolution of this issue in a manner satisfactory to the Bank is a condition for disbursement of funds for the subproject under HDP. OP 4.10 Indigenous peoples The likelihood of subprojects triggering OP 4.10 is not very high. For example, no ethnic minorities are being affected in the proposed two Year 1 subprojects. However, an Ethnic Minority Planning Framework (EMPF) was prepared. Ethnic Minority Plans will have to be developed in accordance with the project EMPF for the subprojects having any ethnic minority group in the subproject areas. BP 17.50, Public Disclosure. The PPA Manual and its supporting annexes provide clear guidance and structure for dealing with public disclosure issues throughout the subproject cycle as required under Bank rules as well as GOV laws and regulations. Regarding the Year 1 subprojects, the EIA report for the Septic Tank Waste Treatment Project (A category) has been consulted with the local authority (Commune People Committee Da Phuoc) and local NGO (the Father Front of the District Binh Chanh) in accordance with the new national law on environmental protection. HIFU has confirmed the public disclosure of the EIA report and the Initial Environmental Examination (IEE) for the West Bus Terminal subproject in the ward People Committee offices since March 05, 2007 in accordance with the Bank?s disclosure requirements. The draft Environmental and Social Guidelines (in the PPA Manual) as well as Resettlement Policy Framework and Ethnic Minority Planning Framework have been disclosed locally and sent to the InfoShop in Washington DC and displayed at the VDIC in Hanoi since March 20, 2007. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: Overall HDP project will help address urban development, current environmental sanitation problems and is expected to have a positive impact on existing environmental and social conditions. Adverse potential indirect and long term impacts could arise through: (a) improper operations of the constructed facilities such as wastewater discharge, transportation and disposal of septage, solid waste management; (b) impacts related to land acquisition and resettlement.

3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. In the Year-1 subproject involving the Septic Tank Waster Treatment, an alternative considered during the preparation of the EIA involved a drying bed and a closed drying system for the emission of CH4 from the septage. The latter option was chosen because it has relatively less odor impact. For the future investments, alternatives will be considered as part of sub-project specific EA work. 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. An Initial Environmental Examination (IEE) was prepared for the West Bus Terminal subproject (Category III) and an environmental certificate was issued by DONRE on April 18, 2005 to this IEE. This environmental certificate is still valid to the basic design which has recently been revised. For the Septic tank waste treatment subproject (category I ) a full EIA report was prepared and approved by HCMC DONRE on March 20, 2007. Due Diligence Programming The PPA Manual has been developed by HIFU with Bank team support in close collaboration with the Department of Planning and Investment DPI, Department of Finance DoF, Department of Natural Resources and Environment DONRE, Department of Transport and Public Works TUPWS and other relevant city departments. The PPA Manual includes the RPF, guidelines on Environmental and social safeguards which are acceptable to GoV and IDA. The PPA Manual has been adopted by HCMC PC and it will go through continuous improvements as HIFU staff gains more operational experience and builds the capacity to undertake more sophisticated projects. There will be a review of the implementation of the PPA Manual every 6 months to allow adjustment of the manuals and other guidelines and/or provide additional guidance and/or training to HIFU staff as necessary. The World Bank team will continue to advice HIFU and HCMC PC on the implementation of the PPA Manual. The WB will retain the right of Prior Review for the first direct investment financed by HIFU under the HDP, as well as prior review for all high environmental risk sub-projects. Capacity of HIFU Bank consultants have assessed HIFU?s institutional capacity to carry out environmental and social safeguard works. The reports reveal that HIFU has the institutional arrangement to manage investments, and its departments have clear understanding of the requirements for implementing the Government and World Bank safeguard policies during a subproject appraisal and investment and monitoring phases. The World Bank policies on involuntary resettlement are relatively new for HIFU. However, HIFU has staff with experience in land acquisition and resettlement gained

through other projects, and training and familiarity with environmental management and EAs. On-the-job consultants will assist HIFU staff in implementing the PPA Manual including the Guidelines on safeguard policies (Annex F and G) on social and environmental safeguards, and in assessing HIFU safeguard performance during the first three years. Independent safeguard monitoring consultants will also be hired by HIFU under the project to monitor safeguard compliance in the implementation of the subprojects. The need for assistance to HIFU in implementing the PPA Manual, including the guidelines on safeguard policies, has been identified and included in the project costs. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. Public consultation on environmental issues was conducted for the Septic tank waste treatment subproject as required by the new National law on environmental protection. At a request from the Bank, the EIA and IEE reports were made available to the public in the two ward People Committee offices from March 5, 2007. HIFU and local resettlement related agencies have been consulted intensively during preparation of PPA Manual and its supporting annexes, including the RPF, environmental safeguards manuals and the social safeguards manual. The preparation of the PPA Manual involved broad based dialogues between HIFU, Department of Planning and Investment, Department of Finance and other relevant city departments. The process also involved a high-level workshop which was chaired by the Vice Chair of the HCMC PC. Additional workshops have also been organized under the guidance of the Ministry of Finance under the Local Development Investment Funds Project (LDIFP) for the staff of HIFU and three other LDIFs to discuss safeguards policies and procedures. In order to pay special attention to the critical issues involving resettlement, a consultation mechanism has been developed for Resettlement Plan (RP) preparation and implementation to ensure that the needs and wishes of all related stakeholders, especially potentially affected people, are addressed in accordance with GOV laws and regulations and Bank policies. Disclosure mechanism is described in the PPA manual in accordance with the Bank?s requirement. Summaries of the EIAs in Vietnamese were displayed to the public in each of the ward people committee offices from March 05, 2007. A copy of the draft Environmental and Social Guidelines (as Annex F and Annex G to the PPA Manual) as well as Resettlement Policy Framework and Ethnic Minority Planning Framework have been disclosed locally and sent to InfoShop in Washington DC and made available in English and Vietnamese in Hanoi's Development Information Center (VDIC) on March 20, 2007. The HDP project?s key stakeholders include:

HCMC Department of Natural Resources and Environment (DONRE) and Department of Transport and Public works, Department of Planning and Investment, Department of Construction, Department of Finance Local authorities of the Ward An Lac of the District Binh Tan (Subproject 1) and the ward Da Phuoc of the District Binh Chanh (Subproject 2) Mass organizations such as the Women Union, Father Front Union Local residents and business in the targeted service areas.

B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other: Date of receipt by the Bank 03/08/2007 Date of "in-country" disclosure 03/05/2007 Date of submission to InfoShop 03/20/2007 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors Resettlement Action Plan/Framework/Policy Process: Date of receipt by the Bank 02/27/2007 Date of "in-country" disclosure 03/20/2007 Date of submission to InfoShop 03/20/2007 * If the project triggers the Pest Management and/or Physical Cultural Resources, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why:

C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting) OP/BP/GP 4.01 - Environment Assessment Does the project require a stand-alone EA (including EMP) report? If yes, then did the Regional Environment Unit or Sector Manager (SM) review and approve the EA report? Are the cost and the accountabilities for the EMP incorporated in the credit/loan? OP/BP 4.12 - Involuntary Resettlement Has a resettlement plan/abbreviated plan/policy framework/process framework (as appropriate) been prepared? If yes, then did the Regional unit responsible for safeguards or Sector Manager review the plan? The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the World Bank's Infoshop? Yes No Yes Yes Yes Yes

Have relevant documents been disclosed in-country in a public place in a form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies Have satisfactory calendar, budget and clear institutional responsibilities been prepared for the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included in the project cost? Does the Monitoring and Evaluation system of the project include the monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately reflected in the project legal documents? D. Approvals Signed and submitted by:
Task Team Leader: Environmental Specialist: Social Development Specialist Additional Environmental and/or Social Development Specialist(s):

Yes

Yes Yes Yes Yes

Name
Mr Kamran M. Khan Ms Phuong Thi Thanh Tran Ms Hoa Thi Mong Pham

Date
05/08/2007 05/08/2007 05/08/2007

Approved by:
Regional Safeguards Coordinator: Comments: Sector Manager: Comments: Mr Panneer Selvam Lakshminarayanan Mr Keshav Varma 05/08/2007 05/08/2007